A post-Brexit trade deal should be governed by a new court system that is fairer to workers, the TUC’s general secretary has said.

Frances O’Grady said Britain and the EU had a chance to take a different approach to arbitration courts that make judgments on trade disputes.

The investor-state dispute settlement (ISDS), a little-known system for resolving trade disputes that has existed since the 1960s, underpins thousands of European contracts. Critics, led by trade unions, have long argued it awards too much power to corporations at the expense of the public interest, and does not give enough protection to workers and consumers.

O’Grady said there was a chance to change the system when Britain negotiates a trade deal with the EU. Britain will not be in position to sign a trade deal until it leaves the EU, most likely in 2019, but unions want to put the issue on the agenda now.

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“There is an opportunity to do this one differently, to ensure that workers’ rights are seen as a core standards rather than an add on, that any arbitration mechanism is not only transparent but fair,” she said.

“I hope people have learned lessons from trade deals like TTIP and Ceta, and public concern over arbitration mechanisms,” she said, arguing that such agreements treated workers and consumers like second-class citizens.

The European commission has strongly rejected claims that it downgrades workers’ rights. The comprehensive and economic trade agreement with Canada was described as the gold standard of global trade deals, with more government oversight than any earlier agreement.

Responding to critics of the ISDS system, the EU trade commissioner, Cecilia Malmström, devised a new kind of special court for resolving disputes, where judges would be appointed by governments rather than disputing parties.

O’Grady said that the arbitration mechanism in Ceta was “better than those that came before” but had not fundamentally addressed unions’ concerns. “If you are going to have standards for goods and services, why not have standards for labour as well, to make sure there is a level playing field and you don’t get competition on the back of workers being treated badly.,” she said.

O’Grady was speaking to the Guardian in Brussels, where she also called on Theresa May to face down “Brexit fundamentalists” in the Conservative party who want to use Britain’s EU departure to start a bonfire of regulations.

Speaking between meetings with EU officials, she said she was pleased with the EU’s Brexit guidelines and the European parliament’s resolution, which both put European negotiators on guard against unfair competition from Britain. The EU draft guidelines – to be agreed by EU leaders at the end of April – call for safeguards against “unfair competitive advantages through … fiscal, social and environmental dumping”.

The TUC’s trickier task is arguably to lobby the British government, as debate rages about what kind of economy post-Brexit Britain should be.

Amid concern that Brexit will drown out the government’s domestic agenda, O’Grady said she didn’t expect much from this year’s Queen’s speech, but stressed the prime minister would be under pressure to deliver on her Downing Street speech after raising expectations about help for people from an ordinary working-class family.

“She is going to have to have something compelling to inspire confidence that people’s lives are going to get better.,” she said.